But it is still unclear precisely why Mr Baillieu, who was struggling in the opinion polls, felt compelled to step down.

And a former state Liberal Party president has called for both Mr Baillieu and Dr Napthine to explain what happened, or face a backlash similar to that experienced by federal Labor after the ousting of Kevin Rudd.

Mr Baillieu quit effective immediately, saying his decision was made "in the best interests of the Government", but that he would remain in Parliament.

He said he would throw his full support behind Dr Napthine, a former Liberal leader who was sworn in as Premier at Government House last night.

If he sides with Labor, Parliament will be deadlocked and that could trigger an election.

Dr Napthine has acknowledged the challenges ahead.

"My parliamentary colleagues gave me the great honour and privilege of electing me as the leader of the Victorian parliamentary Liberal Party. This is a great honour, a great privilege and a great challenge," he said.

Opposition Leader Daniel Andrews says Victorians are "entitled to some very straight answers".

"I think many Victorians will wake up this morning completely unclear about what's gone on," he told ABC News Breakfast this morning.

"What is clear is that this Government is an absolute circus."

He said Dr Napthine was just a "nightwatchman".

"I think over the last couple of years Victorians have grown increasingly dissatisfied with Premier Baillieu's performance and the performance of his government," he told Lateline last night. "I think many of his colleagues have arrived at the same place, if you like.

"I think that Denis Napthine certainly is a stop-gap leader. He is the nightwatchman.

"I think the ambition faction within the Liberal Party will be just as keen to wrest from him the premiership as they were from Ted Baillieu. Mr Napthine would be unwise, I think, to assume that he will get more loyalty from his colleagues than Ted Baillieu did."

'Treachery and gross disloyalty'

Even Dr Napthine admitted he was surprised by his sudden elevation to the top job last night.

"Let's just say this wasn't what I expected when I had my Special K for breakfast this morning," he said.

"The people of Victoria will understand what has happened and the people of Victoria will make their own judgments over the next weeks and months."

Asked by a reporter: "But what happened?", he replied: "Well, what has happened is that there has been an election of a new leader of the Liberal Party because Mr Baillieu has stood aside.

"That is a decision made by Mr Baillieu and I respect his decision."

Dr Napthine is no stranger to the Liberal leadership. He became Victorian leader after the former premier Jeff Kennett lost the 1999 state election.

But he did not lead the party to the next poll after losing a leadership challenge by Robert Doyle not long before the 2002 Victorian election.

The Liberals lost decisively.

Dr Napthine says he is now older and wiser.

"May I remind people that I think John Howard was recycled as a leader," he said.

"There is a tradition in many democracies that people have been re-elected as leaders of their parties and have gone on to the serve those parties and their communities extremely well and I would hope I can do the same."

The Coalition effectively has 44 votes in the Lower House to Labor's 43, providing new cross-bencher Mr Shaw votes with the government.

"These are uncertain times," Mr Andrews said.

"It is a great shame that the people of Victoria have no longer got the Premier they voted for back in 2010.

"He ought to have stayed for the four years but I understand when you are confronted with treachery, when you are confronted with the gross disloyalty that he's had to endure, certainly in recent times, he's made a decision that's best for him."

'Not cut out for it'

Michael Kroger, the former president of the state Liberal Party, is urging the Liberal Party to publicly explain exactly what happened last night.

"I think Ted just had enough and decided look, it was probably better that someone else have a go. I don't think there is any more complex to it than that," he told AM.

"I don't think [his position] was untenable.

"Ted was not a natural politician. He was and is an extremely decent individual of great integrity and honour.

"He went into Parliament to do something for Victoria, to make it a better place. He wasn't really cut out for the nasty side of politics, the cut and thrust, the undermining, the back-biting. That's not his style, that's not what he wanted to go into politics for, and in the end regrettably that caught up with him."